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Embedding ethics into your organisation

17-05-2019

By Kim Woods, CIPFA Senior Trainer/Finance Advisor

Ethics can often be viewed as something personal. In a sense this is right, as ethics work to inform every day decision making. However ethics can apply far more broadly than individuals and the choices they face, rather it can look to how organisations behave as a whole. This is particularly the case in the public sector, which have a responsibility to work for the public good.

There are many clear incentives for public sector organisations to behave ethically, as when poor ethical choices are revealed the fall out can be considerable, and the damage to an organisation's reputation difficult to repair. It can mean a breach of trust with your employees, the partner organisations you work with, and with the public at large. But poor ethical choices still do happen.

On a certain level this is unsurprising, as some people will always behave badly. But in a more general sense, maintaining the high ethical standards expected in the public sector has never been more challenging. We are in a time of rapid change in local government, with pressures created by austerity measures, a growing wave of commercialisation, and the trade-offs needing to be made by councillors and public servants all heightening the importance of ethics.

Broader societal changes are also creating new dilemmas with the rise of social media creating new avenues during which misconduct can be exposed, whether bullying council members, or other anti-social behaviours. There is also increased demand for decision-making to be made at pace, creating a huge amount of pressure.

Interestingly while incidents of misconducts are well recognised, there remains much debate on what ethics really mean. During my workshops on ethics with managers from across the public sector I’ve had countless such discussions. On a personal level, it can be about buying from certain brands, philosophies of life, or even simply ways of getting to work. Ethics means something very different for one individual versus another, and for organisations, this variance can be unhelpful.

Overcoming this challenge as an organisation means having a strong code of ethics in place. What these codes do is set down the professional standards and expectations of behaviour for everyone in the organisation and this is essential. Ethics must in the first instance be built on agreement and shared understanding before it can begin to shape behaviour.

This means getting the right support in your organisation for a code of ethics is crucial, as it cannot be a tick box exercise. Rather, it must be applied to all aspects of your organisations conduct, including your strategies, stakeholder relationships, and communications. So how do you practically actually achieve this? Well there are three tips which I emphasise.

Ethics must be led from the top: The leadership team sets the tone for ethical values, behaviours and practices for the rest of the organisation. If there is poor ethical behaviour among leaders, this will undermine good ethical practices in the rest of the organisation. So it is important that the leadership team embodies the principles and behaviours to which they hold the rest of the organisation accountable.

Everyone must understand the ethical principles: Good ethical practices are not something you just say or believe – rather they are something you do. It’s important to ensure that you embed your ethical code into everything you do in your business, alluding to it in strategies, supporting people to get on board with training, and supporting it with strong internal communications.

Building on mutual agreement: It’s important not only that you are speaking the same ethical language, but that there is agreement that these principles are the right ones for your organisation. One useful approach is to ensure that you are involving everyone in the organisation on these discussions on ethics, particularly when you are reviewing your code of ethics or your code of conduct.

Our survey with Public Finance last year showed more than half of public sector accountants had been put under pressure to behave unethically. With results as concerning as these, organisations should be paying attention and ensuring they embed strong ethical practices.

At CIPFA we took note of the issues and updated our Standard of Professional Practice for our members. We were the first organisation to adopt these standards to align with the International Ethics Standards Board for Accountants code of ethics, based on principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

We also encourage organisations to make ethics part of their focus. The great thing about this is not only are you doing the right thing, but good organisational ethics has been consistently linked to better organisational performance. Multiple studies from groups such as the Institute for Business Ethics have cited greater employee satisfaction, and even better financial results.

When it comes down to it, it is clear no matter what type of organisation, having strong ethics is beneficial – and should be ingrained. For managers and executives in particular, it is important to support action with words, as ethical behaviour a crucial aspect of leadership. Make sure you lead by example.

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CIPFA, registered with the Charity Commissioners of England and Wales No. 231060 and the Office of the Scottish Charity Regulator No.SCO37963. CIPFA Business Limited, the trading arm of CIPFA that provides a range of services to public sector clients, registered in England and Wales no.2376684. Registered Office 77 Mansell Street, London E1 8AN